Obama's End Run on Welfare

The work requirements underpinning the nation’s largest cash-assistance welfare program no longer are legally binding on state governments. They can and will be replaced by alternative rules devised unilaterally by federal bureaucrats.

That, anyway, is what President Obama’s Department of Health and Human Services (HHS) has declared — 16 years after the previous Democratic president, Bill Clinton, signed welfare reform into law.

These changes will increase the number of welfare recipients who receive a check without working. This action by Obama’s HHS grossly violates the intent and letter of the welfare-reform law, as a program this morning at the Heritage Foundation will explore. The U.S. House of Representatives, in a vote set for tomorrow, will repudiate this Obama policy. How did we get here?

In 1996, Congress enacted welfare-reform legislation that replaced the old Aid to Families with Dependent Children (AFDC) program with a new program titled Temporary Assistance to Needy Families (TANF). The immediate effects were striking.

During the four decades prior to the 1996 reform, the welfare caseload never significantly decreased. By 1995, about one in seven children was on AFDC. Within just a few years of TANF’s implementation, however, the caseload was cut in half, and employment rates and earnings among single mothers soared. Child-poverty rates declined significantly. Roughly 3 million fewer children lived in poverty in 2003 than in 1995, including 1.2 million fewer black children, marking the lowest level of black child poverty in the nation’s history.

Federal work requirements in the TANF program form the foundation of the 1996 law. These work standards require 30 to 40 percent of able-bodied TANF recipients to engage in any of 12 different work activities for 20 to 30 hours per week.

In July, however, the Obama administration granted itself authority to “waive compliance” with all the TANF work provisions. HHS declared that the work requirements written in the law are no longer legally binding on state governments; they can and will be replaced by alternative rules devised unilaterally by the HHS bureaucracy.

In its guidance memorandum and related documents, HHS outlined changes in TANF that would 1) lower the already lenient work-participation rates by exempting substantial and loosely defined groups of recipients; 2) likely broaden the definition of “work activities”; 3) replace the requirement that recipients engage in work activities for 20 to 30 hours per week with looser standards, perhaps as little as one hour per week; and 4) replace the work-participation requirements entirely with alternative standards based on the number of “employment exits” (TANF recipients who lose eligibility due to increases in earnings). All of these changes are likely to substantially increase the number of welfare recipients who receive a check without working.

Stung by criticism that it was weakening the work requirements in welfare, the Obama administration released a letter stating that some or all of the states receiving waivers would be required to increase the number of recipients who left welfare for employment by 20 percent — or at least to make progress toward that target. In reality, this is a minuscule change. To meet this standard, the typical state would need merely to increase the number of monthly “employment exits” from 1.5 percent to 1.8 percent of the caseload.

States have kept statistics on employment exits for decades and, as a measure of success, they have been meaningless. Why? Because welfare caseloads always have routine turnover. The larger the caseload, the greater the number of exits, simply because there are more people in the system. Historically, the number of employment exits rises as welfare caseloads rise and falls when welfare caseloads fall; increases in employment exits are negatively correlated to reductions in caseloads and dependence. For this reason, Congress deliberately excluded employment exits as a performance measure when crafting the 1996 welfare-reform law.

Now, the Obama administration seeks to make “employment exits” the central performance standard of a radically revised TANF program. Paradoxically, by this standard, the pre-reform AFDC program was a stunning success: Employment exits nearly doubled in the decade before reform, even as caseloads were increasing by a third. By contrast, the post-reform TANF program has been a decided failure: Both exits and caseloads have fallen. So the Obama administration is not merely gutting welfare reform; it is standing welfare reform on its head.

Some 95 percent of the public believes that able-bodied recipients of government aid should be required to work or prepare for work as a condition of receiving assistance. By that standard, the existing TANF work rules are already too lenient. Half of able-bodied recipients receive a welfare check but perform no activity at all. Most Americans don’t know that the federal government runs over 80 means-tested welfare programs providing cash, food, housing, medical care, and social services to low-income individuals. In 2011, these programs cost $927 billion and gave benefits to more than 100 million Americans, at an average cost of $9,000 per recipient.

At the beginning of the year, only three of the 80 programs had a significant work requirement: the earned-income refundable credit, the additional-child refundable credit, and TANF. Now, in many states, the TANF work requirements will be weakened or eliminated.

Government should take the opposite course. TANF’s work-participation rates should be increased, to cover more recipients. In the long term, strong work-participation standards should be established for food stamps, public housing, unemployment insurance, and Medicaid.

Regrettably, the Obama administration is marching briskly in the opposite direction.

— Robert Rector, a leading authority on poverty and the welfare system, is senior research fellow in domestic policy at the Heritage Foundation. He is the author of the new report “Marriage: Americas Greatest Weapon Against Child Poverty.”

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